The dread comes over you like a wave and lands smack in the middle of your stomach. It's time to fire your rude, incompetent employee. Or you need to ask your business partner why he did something against your wishes. Or you have to discuss why your close business associate undermined you in front of prospective clients. It's time to have one of those conversations that sends you straight into Pepto Bismal land.

Sheila Heen, a partner in Triad Consulting Group, a firm dedicated to assisting organizations in tough conversations, has made it her career to study word wars to find out how we can stop yelling, feeling frustrated and actually get to the heart of the problem. Heen recently wrote Difficult Conversations: How to Discuss What Matters Most (Penguin Books, $12.95) with co-authors Douglas Stone, another partner in Triad, and Bruce Patton, deputy director of the Harvard Negotiation Project. The book is a remarkably straightforward guide to dealing with the conversations which can cause so much strife and strain on both personal and business relationships. We've asked Heen to share some tips of the trade to help you deal with your toughest talks.

Entrepreneur.com: In Difficult Conversations, you say there are three types of difficult conversations? What are they? What are their inherent challenges?

Sheila Heen: Actually when we started writing this book, we thought that there would be eight or 10 or 12 kinds of difficult conversations, like asking for a raise, giving negative feedback or talking with a spouse about money. But what we found is every difficult conversation has the same underlying structure. So the same things get us stuck [in every difficult conversation] and the same simple things can actually help the conversations go much more productively.

We discovered that every difficult conversation is really three conversations happening at once. The first is what we call the "What Happened?" conversation and that's the most obvious-when we're arguing about who's right, who's to blame and what's motivating you. Were you trying to annoy me, were you trying to undermine me, what are your intentions?

But beneath that, and maybe more important, there are two things going on. The second conversation is what we call the "Feelings" conversation, which asks questions about what to do with all of these strong feelings you have, especially in a business context where you're supposed to check your feelings at the door. And what do you do if they start to get angry or cry. We often make the mistake of trying to exclude feelings from the conversation when often feelings are at the heart of the difficulty. How we're each feeling treated is really the issue.

So then the third conversation is the "Identity" conversation. Often what makes us anxious about these conversations is what the situation seems to say about you. If I'm asking [to raise my fee for a client], it's not the money that's on the line, it's my self-esteem or my self-image. Or [if you think,] "I'm not the kind of person that hurts someone's feelings," that's going to be a real problem if you need to give negative feedback or fire someone. So often what's getting us stuck is something in our own identity conversation.

Entrepreneur.com: You say difficult conversations "are not about what is true, they are about what is important." What does that mean?

Heen: A big mistake we make is thinking the question is whether we're right or not. And if we're right, well then, we should win this conversation. The problem is that difficult conversations almost never occur around questions that have a right or wrong answer. The question of "How much should I be charging?" is a lot about the identity conversation. But it's not as if there's a right or wrong answer. It's about how much you feel you're worth. How much can you represent with a straight face and not feel like a fraud or like you're being taken advantage of? And although the market will give you a range, a lot of negotiation has to happen internally before you can negotiate with your client.

Entrepreneur.com: What are some things we should accept about ourselves during the identity conversation?

Heen: Sometimes the conversation you need to have isn't a conversation with the other person, it's a conversation with yourself in which you need to let go of what we call the "either/or" identity. Either I'm competent or I'm completely incompetent. If I made a mistake, then that's a disaster because now I've totally redefined myself.

So one thing to accept is that, whatever your description is of the kind of person you are, sometimes it's not true. Everybody makes mistakes. Everybody is sometimes less generous, competent, ethical, loyal, responsible or thorough than they would like to be. So accepting that and accepting responsibility for the things you wish you had done differently can actually mean you don't have to have the conversation at all. Or that if you do have the conversation, you're much better grounded because you've already accepted those things. You disarm the other person from being able to knock you off balance with these things.

Entrepreneur.com: What's the purpose of the third story?

Heen: Let's say my business partner and I are in conflict because I feel he's not putting enough time into the business. The temptation is to always start the conversation from inside my story, my version of events. "Look, Doug. You need to decide whether you're committed or not." And what that does is offers him the role of the villain.

Some people will say you should start from inside the other person's story; we call that the second story. And that can sometimes work, unless you're the kind of person who is very empathetic and has trouble coming back to your own version of events. After the conversation, you kick yourself because you never spoke up for yourself. That can be really dangerous, and it can also be misleading for the other person because they're just going to think, "Okay great. You agree with me. No problem."

So what we recommend is starting from the third story, which is how a third party, who knows and is sympathetic to both of you, would describe the difference in your views. So I might say to my business partner, "Look, we've had this conversation before and I think we have very different views on how much time is reasonable to spend with the business, what we each expect out of it, and maybe even our vision of where we're going with it. I think that's been a source of conflict for us and I'd like to talk about it."

That invitation alone doesn't accuse them of anything. It says, "Here's a definition of the problem that is neutral. So will you engage with me in having the conversation as a partner?" The role you're offering them is appealing. Once they're in, you can talk about their side of the story and how you're feeling about it and thinking about it. Now you're partners in figuring out what to do together.

Entrepreneur.com: You have a section on listening. Why is this important and how does curiosity come into play?

Heen: I think there are a couple of really important things to say about listening. Everybody thinks, "Yeah, yeah, listening is important," but people actually treat it as a strategy of last resort. Like if all else fails, I guess we'll listen. And when we coach people, it's the single skill that would make the biggest difference in their ability to have this conversation.

So given that, there are two things I will say about it. One big mistake we make is that we assume that if we've thought about the other person's point of view or we've had this conversation before, we must know what their side of the story is. What you have to remember is you always have something new to learn and if their side of the story isn't making sense to you, there's something you don't understand about how they're seeing things.
The second thing is a lot of listening courses teach you to paraphrase and to acknowledge and to ask questions-those are all really good skills. The problem is if you're using the behavior but internally you're still thinking, "Well, you're wrong," then you're still thinking, "Okay, I guess I can listen for 10 minutes and then tell my side of the story." Then it's going to come off as insincere or annoying. I think everybody's been in a conversation where the other side is saying, "What you're saying is this," and it's clear they're also thinking, "And that's ridiculous."

So we actually think you have to learn to listen from the inside out. You're internal stance has to be one of genuine curiosity, even if the curiosity is "How in the world can they see it this way?"